Home favourite Sam Stosur blew a 5-2 lead in the final set to be dumped out of the Australian Open by Zheng Jie of China.
Stosur, who has never made it to the second week in Melbourne, served for the match but proceeded to lose the next five games as she went down 6-4 1-6 7-5.
The ninth seed had 56 unforced errors in the match and sent down nine double faults, the final one handing Zheng the match.
The 28-year-old former US Open champion had minor ankle surgery last year and lost in the first round of the warm-up events in Brisbane and Sydney.
"At 5-2 up in the third, double break, probably is a bit of a choke, yeah," Stosur admitted. "Obviously it's a hard one to take when you get yourself into a winning position and you lose five games straight."
Meanwhile, second seed Maria Sharapova breezed into the third round with a 6-0 6-0 victory over Misaki Doi of Japan in just 47 minutes.
Remarkably, it was the second double-bagel in succession for the Russian after her first round shutout victory over compatriot Olga Puchkova - the first such feat since Wendy Turnbull in 1985.
However, things are set to become more difficult for the 2008 champion with Venus Williams awaiting in the next round.
The veteran American, seeded 25 in Melbourne, came through 6-3 6-3 against Alize Cornet of France.
"I haven't played too many matches so it's just good to get out there and start competing again," said Sharapova, last year's runner-up.
"But it's always tough, especially when you're up a set and a couple of breaks, to keep that momentum. I really forced myself to concentrate and just get the job done today."
Meanwhile, 13th seed Ana Ivanovic moved into round three after being made to battle hard by Yung-Jan Chan of Taipei, eventually coming through 7-5 1-6 6-4 against the world number 118.